7 tips to consider while buying the best term insurance plan

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The current pandemic situation has made us the realize the grave importance of health. Now that we know how important it is to invest in a life insurance policy, you should also know that buying a term insurance plan is a good thing to do.

Not only a term insurance plan protects the future of you and your family members in case of your sudden demise, but a term insurance plan also offers several advantages.

While we know the advantages a term plan offers, here is a list of X tips you must keep in mind while purchasing the best term insurance plan for your loved ones.

  1. Select the right coverage

The first step to selecting the best term insurance plan is to make sure that you get ample coverage.  Go online and you will find so many online calculators which will assist you to determine how much coverage is suitable for you. The general rule is to opt for coverage where your sum assured must be 15 to 20 times higher than your annual income. You should also take into consideration factors like your age, your financial responsibilities, and the number of years left for your retirement. 

  1. Select the right term insurance plan:

Max Life insurance offers many types of term insurance plans. Generally, there are two types of term plans- simple vanilla term insurance plan and income replacement term insurance plan.

The former pays out a lump-sum amount to the nominee in case of your death, while the latter pays a part of your sum assured regularly for a certain period of time till the total cover amount is completely paid and is completely exhausted. To make an informed decision, it is up to you to decide which term plan works well for you and your family members. If you believe that a regular income will help your family members to take care of their needs easily and not exhaust the sum assured quickly then it is recommended that you choose an income replacement term insurance plan. On the other hand, a simple vanilla term insurance plan will be best for you if you are sure that your spouse or nominee is skilled at investing the lump sum and taking care of their future needs.

  1. Make sure to compare premiums

Before you invest your hard-earned money in a term insurance plan, which is a great way to save for the future of your loved ones, it is important that your compare each term plan’s features and benefits with the other plan. The market is flooded with aggregators and experts who can help you make a wise decision

  1. Claim Settlement Ratio

Another crucial factor to keep in mind while choosing the best term insurance plan for your family is to read up reviews about the company’s settlement. Just make sure that the higher your claim settlement ratio, the easier it will be for your family members to claim the insurance amount in your absence.

  1. Solvency Ratio

The solvency ratio refers to whether the insurance company you select will be able to settle your claim if the need ever arises. As per the rules laid down by the Insurance Regulatory and Development Authority of India (IRDAI), the solvency ratio of every company should 1:5.

  1. Additional benefits: Look out for these additional benefits when you are choosing the best term insurance plan for your family’s future.
  2. Waiver of Premium: This is an important aspect as the term plan will continue even if there is an unfortunate situation such as an accident leading to disability. Therefore, you must check out this option of waiver of premium.
  3. Accidental benefit: This is an additional benefit that many term plan companies give in a situation where the insured gets into an accident. just make sure that the accidental cover is equal to the base sum assured.
  4. Income benefit: This will greatly benefit you if you want your family members to receive a set amount of money instead of the lump sum amount.
  5. Get to add enough riders to your plan

Now that you have made up your mind about selecting the best term insurance plan, it is equally important to add enough riders. Riders such as waiver of premium, loss of employment cover, critical illness go a long way in financially sustaining your loved ones in your absence. Moreover, it is important that you keep an eye on the riders since they add considerable value to even a basic term insurance plan.

Understanding how health insurance works or term insurance works is key to making a sound financial plan for your loved ones’ future. Make sure you spend ample time assessing your particular needs to make a truly efficient and useful financial plan.

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